Consumers across the United States are flocking to car dealerships, accelerating vehicle purchases in anticipation of potential price increases tied to new import duties. This rush stands in contrast to slowing spending trends in other retail sectors, where economic uncertainty appears to be prompting shoppers to delay decisions.
Market researchers and early reads from the Federal Reserve suggest a split in consumer behavior. While the automotive sector saw robust activity, spending on items outside of vehicles slowed overall, according to the latest Beige Book report on economic conditions. The report noted that uncertainty around international trade policy was pervasive across districts, contributing to hesitant spending.
This divergence was evident in recent data. March retail sales, excluding motor vehicles and parts, increased slightly, while sales in the auto sector jumped significantly, the Commerce Department reported. Much of this acceleration in big-ticket purchases, like vehicles and appliances, occurred in March in a rush to beat tariffs, according to data on orders for durable goods. The threat of higher auto tariffs appears to be a primary driver for the surge in vehicle sales.
The potential financial impact of tariffs is a concern for car buyers. Cox Automotive estimates a 25% tariff could add thousands to the cost of imported vehicles and those assembled domestically using imported parts. This has spurred showroom traffic and sales, with some dealers describing a buying frenzy similar to past periods of economic disruption.
However, this forward buying is not translating across the board. Consumer surveys indicate many Americans plan to postpone major purchases like homes, appliances, or furniture due to tariff concerns, rather than speeding them up. March home sales fell to their slowest pace in years, impacted by caution alongside higher mortgage rates.
Retailers selling a wider range of goods are not reporting widespread stockpiling behavior, like that seen ahead of a port strike last year. Instead, sales patterns have become less predictable, reflecting greater market volatility and weaker consumer sentiment earlier in the year. Executives at companies from PepsiCo to Chipotle have noted pockets of slower spending.
The impact is also visible in services. Domestic airline bookings are softening, with carriers offering fare sales to fill seats. Industry executives attribute this to economic uncertainty, trade tensions, and volatile markets. Several airlines, including American Airlines and Alaska Air, have pulled their financial outlooks or warned of weaker demand for parts of their business sensitive to economic conditions, with Alaska Airlines noting fares are not as strong as expected.
A report highlighting "doom-spending" indicated that while some make substantial purchases out of fear, a significant portion of Americans are stockpiling goods or anticipating going into debt. Roughly half of those making purchases over $500 since November said fear of higher prices influenced their decision, according to the report.
The current climate seems to be fostering a consumer tendency toward conserving cash. Personal savings rates increased during the pandemic as spending options narrowed, according to data from the St. Louis Fed. This cautious approach appears to be returning as shoppers face unpredictability.
Steve Zurek, vice president of thought leadership at NielsenIQ, said, “There’s so much uncertainty right now that shoppers just don’t know what to do. There’s nowhere to hide here — all they can do is control the household economics they have.”
